Grains Slide Deeper as Cattle Stage a Comeback — Feeders Slam Limit Up

Grain charts continued to break down as the selling snowballed into the afternoon.  Cattle got whacked on the open but recovered quickly with feeders settling limit up!  

Grain and Oilseeds Wrap Up

The bleeding didn’t stop today for the corn market, with July futures falling to fresh contract lows at $4.21 ½ while the December contract hit $4.50. The plunge isn’t a result of favorable weather or a bearish headline. It makes some sense that prices needed to fall off their May highs, but now the market is hitting oversold levels and a recovery is likely with a lot of growing season ahead. If you want to step in front of a market that’s steamrolling lower, take a look at option strategies to participate in what we think will still be a volatile summer for corn prices.

It seemed like only a matter of time before soybeans were going to tip over while corn and wheat have been falling off a cliff. July soybeans took on losses of over 30 cents at times today breaching their last major moving average that was sitting at $11.36 and leaving long-term uptrend support as the last line in the sand within the $10.90 to $11.00 zone. November soybeans need to hang on within the $11.30 to $11.40 area to avoid leaving room to run to the downside. A relief rally might surface following a few days of wreckage, but expect selling to follow any upside price action unless positive headlines show up soon.

The wheat markets at least avoided double-digit losses but showed little sign of putting an end to their downward momentum. The July Chicago contract moved close to its last line of defense where support sits within the $5.75 to $5.80 area. July Kansas City wheat looks like it will make the move all the way down to $6.00, which is still 20 cents away. Prices have moved into oversold territory so we’ll see if the end of the week prompts a turnaround. Don’t get hopeful that a major rebound sticks though.

Cattle

Expanded Limits for Cattle Tomorrow

Live Cattle: 12.75

Feeder Cattle: 16.00

The highly anticipated cattle market trade began the day with $5.00 losses in fats and $7.00 losses in feeders. The initial reaction to screwworm in the US was negative, followed by a quick surge higher. Daily price limits were expanded for cattle back on Monday and feeders reached limit up gains today of $10.75. August feeder cattle traded a $17.00 range today. The next upside target remains at the gap left on the chart from May 22nd, that needs a rally past $356.525 to be filled. August live cattle are back into their recent resistance area, where upside momentum has stalled in the $242 to $243 zone. Screwworm in the US and the impact on the cattle herd likely leaves more upside room for prices to run.

Hogs

July hogs started the day with losses of around $2.00 to take another look at the $100.00 area, and then managed to come off the lows. A base of support is building around $100.00, cutout values are slowly but surely climbing and seasonal strength should start to encourage fresh buying interest in the futures market.

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